Between November and December 2024, it was found that home prices rose by 1.2%. The Tel Aviv district showed the sharpest annual price increase: 10.3%, and the southern district the lowest increase: 4.5%. When factoring in financing benefits, the increase is more moderate.
By Doron Breutman, Nadlan Center
A comparison of transaction prices made in December 2024–January 2025 versus those made in November 2024–December 2024 shows that apartment prices rose by 1.2%, according to a Central Bureau of Statistics (CBS) statement published today (Friday). A year-over-year comparison of transaction prices from December 2024 – January 2025 versus those from December 2023 – January 2024 shows that the annual apartment price index rose 7.7%.
A breakdown by districts shows annual price increases in all districts: Tel Aviv (10.3%), North (9.9%), Haifa (9.5%), Jerusalem (5.6%), Center (5.0%), and South (4.5%). A monthly breakdown by districts recorded price increases in all regions: Jerusalem (3.0%), North (1.8%), Haifa (0.1%), Center (0.2%), Tel Aviv (1.8%), and South (1.1%).
The Construction Cost Index for residential construction rose in February 2025 by 0.4%, reaching 137.7 points compared to 137.1 points the previous month. Since the beginning of the year, this index has increased by 3.1%. The index for residential construction excluding labor costs rose by 0.7%. Over the past 12 months (February 2025 compared to February 2024), the Construction Cost Index for residential construction rose by 6.0% due to a 9.4% increase in labor costs and a 3.5% increase in materials and products.
80:20 benefit equals 6.4% discount
In this publication, the CBS examined for the first time the effect of financing benefits on the prices of new apartments. The CBS notes that the impact of financing benefits slightly moderated the index increase. When financing benefits are factored in, the cumulative increase in new apartment prices over the past three years is more moderate by 1.3 percentage points (20.5% versus 21.8%).
Regarding financing benefits, analysis by the CBS of transactions from November 2024–January 2025 shows that financing benefits for new apartments constituted 14.4% of all new apartments sold. Additionally, the data shows that the most common benefit is the 80:20 type, accounting for about 49% of all benefits granted. The second most common benefit is 85:15, accounting for about 28%. The third most common benefit is 90:10, accounting for about 19%. The remaining types of financing benefits make up about 4% of all benefits.
The CBS also attempted to assess the value of the benefit, based on a discounting model developed at the Business School of Reichman University. The average time between the transaction date and the occupancy date, according to the average of executed transactions, is 3.2 years; the annual discount rate is 4.75%. The model shows that a financing benefit of the 80:20 type where delivery is 3 years after signing the contract is equivalent to a 6.4% discount, while the 15:85 financing benefit is equivalent to a 7.0% discount.
Dror Ohev Zion, CEO and owner of DRA Real Estate Marketing: “The housing price index rose by 1.2%, reflecting a continued trend of rising housing prices despite high interest rates and a decrease in the number of transactions in the market since January 2025. This is because construction costs are skyrocketing, execution time is lengthening, and the relatively low supply issue in the market has still not been resolved.”
